First Active lent €28 million to two construction companies chaired by former Taoiseach Mr Albert Reynolds only to put them into receivership just over a year later.
The funds are understood to be among the largest issued by the former building society in the commercial sector. The decision to apply for the placing of the companies, Moorview Developments and Salthill Properties, into receivership came despite moves by their boards to seek an examiner instead.
The companies have not yet ruled out a challenge to the appointment of receiver Mr Ray Jackson of KPMG.
First Active's move is thought to have been triggered by fears that their debts were in danger of outstripping the assets, such as property, against which they were secured. No-one from the mortgage bank was available to comment over the weekend.
The loans dwarf the bad debt provisions made by the bank in its most recent accounts.
Mr Reynolds chaired both of the companies, which are owned by builder Mr Brian Cunningham. The companies boast identical director lists, which include the former head of IDA Ireland, Mr Padraic White, former Bula director Mr Patrick Gillen, Mr Tony Rooney, previously the managing director of the Berkeley Court Hotel, and Mr Cunningham's wife, Ms Marian Cunningham.
The decision by First Active marks a setback in its attempts to widen its business focus as its period of protection following the termination of its mutual status draws to a close.
In its annual report last January, chief executive Mr Cormac McCarthy described First Active's approach to the commercial sector as "selective" in 2002, when a total of €387.9 million was advanced, a fall on 2001 .
Moorview Developments was incorporated in 1980 and last filed accounts for the year to the end of September 2000. Those showed it having debts at the time of €28 million, up sharply on the previous year. Apart from First Active, money was then owing to Permanent TSB and Ulster Bank. Moorview has most recently been involved in building social housing in north Dublin. In 2000, it lost €1.8 million on turnover of €13.5 million
Salthill Properties - one of a number of firms associated with Moorview - was incorporated in 1998 and was involved in the redevelopment of the old Banba Hotel site in Salthill. Its most recent accounts, filed in June 2001, showed debts of €11.1 million.
